Having been in the financial industry for 9 years, I have had the opportunity to process quite a number of mortgage facilities and have learned a lot during the process.

I see the trend of people taking mortgages is on the rise.

So before taking a mortgage or you currently have one, you might want to know certain things that would help you make a sound financial decision.

Feel free to ask any questions on mortgage.

What with the high rents that continue to soar in Nigeria, the average Nigerian is forced to seriously consider owning a house be it for residential or investment purposes.

As you will agree, paying huge sums for a property via one's cash is not feasible. And in cases where feasible it may not be wise. This leads to the consideration of taking a Mortgage. The Mortgage business in Nigeria has its own dynamics. As such, it is difficult to use the western world and developed economy as a yardstick for measurement.  One of the key indices militating against mortgage in Nigeria is Pricing. Interest rates on Mortgages in Nigeria currently ranges between 18%p.a to 22%p.a when dealing with Commercial Banks and could get to as high as 25%p.a when dealing with Mortgage Houses. This lead to high monthlty interest repayments.

There are 2major types of structuring a mortgage loan. The Equated Installment and the Non-Equated Installment. Under the Equated Installment, the loan repayment.is structured in a way that you have a constant repayment amount throughout the tenor of the loan. As such, the principal component of the repayment would be minimal at the start of the loan and gradually increase as interest component decreases. For the Non-Equated Installment, the loan repayment is structured such that your principal repayment is a fixed amount and the interest component varies. As such, your repayment would vary throughout the tenor of the loan.

Most individuals prefer the equated monthly installment because they get to repay a fixed installment amount. But unknown to most, when it comes to mortgages, this option is the worst option. This is because you get to repay more of interest and less of your principal till towards the tail end of the tenor.

In some .cases, the equated instalment might be unavoidable due to one's debt service ratio. This is the ratio of your income to the loan repayment. The best way to deal with this is to make voluntary repayments to reduce your principal. This means you have to make a lot of sacrifices and cut back a lot of excessive spending.

Whatever the scenario, the best way to operate a mortgage is to always make voluntary repayments so that you can pay off the loan way before the scheduled tenor.


will kick start the conversation with this:

Thank you for this topic my question is that
1. I have a piece of land for with I'm planning to have 2units of 2bedroom and 2fo 2 bedroom flat. That's my wish, can I access mortgage for this,
2. Someone since discouraged me from mortgage saying as time goes on the terms can change and I'll end up paying more than I bargained , talking from a personal experience, he is now paying like 2x more than the starting monthly repayment ,he told it was due to some bank palava which I don't really understand .
Can this really happen
3. What are the options for people that are into business and not salary earners.
4. At what point can I voluntarily pay off the money, and let's say I'm on 10 years plan and I decided to pay off at 5th year will I also pay for the interest of the remaining 5years

sainty2k3:
Thank you for this topic my question is that
1. I have a piece of land for with I'm planning to have 2units of 2bedroom and 2fo 2 bedroom flat. That's my wish, can I access mortgage for this,
2. Someone since discouraged me from mortgage saying as time goes on the terms can change and I'll end up paying more than I bargained , talking from a personal experience, he is now paying like 2x more than the starting monthly repayment ,he told it was due to some bank palava which I don't really understand .
Can this really happen
3. What are the options for people that are into business and not salary earners.
4. At what point can I voluntarily pay off the money, and let's say I'm on 10 years plan and I decided to pay off at 5th year will I also pay for the interest of the remaining 5years

1. Yes you can take a mortgage for this. It is called a construction mortgage. Although you must have a perfected title in your name to the proposed land you want to build on.

2. Well, it can happen. The bank always reserves the right to vary the terms and conditions of any facility. Interest rates could go up. And this would lead to higher repayment amounts.

3. There is a product for self employed business men who intends to take mortgages. Some banks call it commercial mortgage while others may call it self-employed mortgage. However, the tenor is usually shorter. Since repayment will be from the business turnover. And interest rates tend to be slightly higher.

4. Most banks usually lock in their mortgages for a 1 year period. Payment in the first year would usually attract a sanction of paying the full interest payable for the first year. However, after this you can pay off at any point without any sanction. You can also make unscheduled bulk repayments at any point.

following

please i will like you to explain how mortgage payment works when paying for a property. e.g you want to pay for a detached house and you discover there is a flexible mortgage payment option on it. how is such payment being done?

uugomartins:
please i will like you to explain how mortgage payment works when paying for a property. e.g you want to pay for a detached house and you discover there is a flexible mortgage payment option on it. how is such payment being done?

apparently, you are talking about a scenario where the property developer gives you a certain period to pay for the property. It is not a mortgage. In this case if the property goes for N1m, the developer can offer you a payment plan of 2 years by paying N60, 000 monthly. So at the end of the day you get to pay N1, 440,000 instead of the current going price of N1m.

It is a good way of buying a property but you must be sure you will not default. Often times the developer will make you sigh an agreement that should you default a certain number of times you will forfeit the property. And when they refund you it will be less administrative charges without interest irrespective of how long they have held onto your funds. In most cases, you do not take ownership of the property until full payment has been made.

Every middle class employee in Nigeria now seems to see mortgage as the fastest way to own a property. However,  most are unaware of the implications of a mortgage on their finances. So, i am going to mention certain factors that could make a mortgage go wrong that most individuals fail to consider.

1. Rising Inerest Rates: One of the challenges of taking a mortgage in Nigeria today is rising interest rates. In 2007, mortgage interest rates in Nigeria was bow 14% to 16%p.a. However,  today the rates range between 20% to 25% p.a The implication of this is that Mr. A who was repaying N200, 000 as monthly repayment in 2007 may be repaying up to N600, 000 monthly now. Which means if Mr. A was earning N600,000 in 2007 and could conveniently make his monthly mortgage repayments back then, that may no be the case today. Moreso because even if his salary has increased over the 8year period, the rate of increase would probably not be proportional to the interest rate increase. This may lead to defaults and it becomes necessary to sell off the property. And considering the interest repayments that has been made to the financier, the sale may end up being at a loss. As such, when taking a mortgage, it is important to consider the unforseen Interest rate increase. My advice is that for any mortgage you intend to take, the repayment amount should not exceed 10 to 15% of your income. So that,  should there be future rate increases, your income will still have enough room to accommodate such increase.

2. Loss of Job: As we know, life is full of uncertainties. Due to economic realities, organization's tend to downsize their workforce from time to time and anybody, emphasis on anybody can be a victim. Now assuming, Mr. X has taken a mortgage for 20 years and suddenly looses his job 4 or 5th ears down the line. Getting another job may not be immediate and in some cases may notveven be feasible. In such a situation, if he begins to default on his repayments, the financier may be forced to sell the property to recover their exposure if no viable repayment plan is not proposed. The sale of the property would likely be at a forced sale value since the financier is majorly interested in quickly recovering their funds. As such, when interest repayments Mr. X has made is taken into consideration, often times the sale ends up being at a loss to him. My advice on this is that,  for any mortgage an individual intends to take, the monthly repayment should not exceed an amount the individual is sure he can earn in the absence of a stable job. As such, should you loose your job, while waiting to get another one or start a business, you can conveniently keep repaying your mortgage.

3. Overvalued Properties: It is common knowledge that the properties in Nigeria, especially in Lagos are overpriced. This is as a result of owners of such properties having gotten their funds through illegitimate means.  The impact on this on mortgage is that, should the need arise that you need to sell off the property to liquidate your mortgage and make a spread, it may be not be realisable. This is because you had bought the property at an already overpriced value and when you need to resell, the appreciation  on the property maybe insignificant or you may need to need to lower the price so as to sell it off quickly. My advice on this is that,  before purchasing a property, take time in valuing the property and ascertain that the offer price is reflective of the materials used in building the house and the location

nice one

Following, nice job op, am always skeptical about all these mortgages to avoid being hooked.

Mortgages have become increasingly popular in Nigeria. This is due to a variety of mortgage awareness campaigns launched by the government and various private sector banks. Mortgages offer you the ability to pay for a house in installments rather than in one go.

It is important to make sure that before taking a mortgage, it is something you can afford, as a mortgage is a big commitment.

More on mortgages in Nigeria:

https://www.villaafrika.com/how-to-get-a-mortgage/

Oh, great thread, I like it. Since I recently took out a loan, I am very interested in any information about this. I am sure that anyone who was in my place will be useful to contact Mortgage Advisor Cambridge. This is exactly the company that helps regulate such issues, and if there are problems, then this team of specialists will easily solve them. I am very grateful to them for helping me find out more details that helped me deal with some of the paperwork needed to sign the contract. I am sure that many people will be interested in this information and will definitely help as I once did.

It is quite advantageous to take out a mortgage in 2022 because the hecm lending limits have never been so high. Now that lending limits have increased, I decided to refinance my reverse mortgage, so I'm going to have an additional income and retire sooner in my own home. So, I will plan a vacation with my wife in Europe with the funds that I'm going to get. I haven't been on vacation for over five years, especially in Europe; this is a great opportunity and a good deal, our house, and traveling with your beloved.

I have to say this thread is an absolute treasure! Thank y'all so much for contributing with your insightful thoughts. I'm a young man who has been dreaming of moving into his own house for years, so I feel that now I'm finally ready to make a move. Obviously, I won't be able to pay for it straight away, so taking out a mortgage sounds like a good plan. A good friend of mine has recently managed to purchase a cool house in the UK, so I have to say I'm quite jealous! He sought assistance from Mortgage Advice Derby, so I'm looking forward to finding someone as reliable. Cheers!

This is very insightful m thank you @scondy. I am in my early 30s, I run a small business and been saving for a property. I have since realized it will take forever to achieve. I have since reached out to property managers to see if I can get a payment plan spread out in 3 years and I am also considering mortgage which is why I am on this thread. Thank you for sharing your knowledge.

This post is very enlightening, but if I may ask;from past experience; is there any reliable mortgage bank or establishment that a young salary earner like me can use to achieve my house ownership dreams.
I intend to pay in installment and I don't have collateral.